Data rich, insight poor

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The secret to your organization’s success is rarely more data.

Geoff Wilson

I woke up this morning and stood on my bathroom scale. The scale is, like many things nowadays, networked and bluetooth’d. It takes my weight, heart rate, body fat percentage (don’t ask), water percentage, and something called “pulse wave velocity” that I’ve yet to understand or investigate. It logs all that data for me to shamefully view on my mobile phone whenever I like, thanks to an app that connects to my bathroom scale.

An APP that attaches to my BATHROOM SCALE, people! The United States landed a man on the moon using slide rules to calculate, and here I am today with a scale that can instantly dispatch my disgrace around the world.

But it isn’t enough for information to simply be collected and “there”—it’s what you do with it that matters. And on that note, let’s shift from the topic of my body weight (nothing to see here, folks).

Data rich, insight poor

Modern institutions have astounding arrays of data sets to access. The sets are often not only overwhelming but competing as well. One client we serve measures revenue at least three ways, and gross profit margins can be viewed in at least three more ways—as in, we could apply three different margins to each of the three different revenue stream metrics.

Management teams have access to operational statistics, people statistics, economic data, customer surveys, sales force metrics, supply chain metrics, and countless additional data bases and data points. They can, quite literally, send measured data anywhere, anytime.

So-called “big data” is here—but it isn’t always what it’s supposed to be. That’s because there’s a paucity of insight accompanying that data. For all the richness of data at our fingertips, we’re poor when it comes to insight. In the worst cases, we are paralyzed by the sheer volume of data we can access.

At one client we recently served, a long-range forecast of a global market turned into the ultimate merry-go-round, as the forecast assumptions were tweaked and adjusted to the point where debates raged about long-range global growth rates and whether they should be .1% higher or lower over 10 years. The debate, while comforting to those involved, didn’t really matter.

That, my friends, is the consequence of being data rich and insight poor. And it’s a frequent problem.

The answer

So, what’s an action-oriented executive to do? I’ll put it simply: Know when enough is enough.

Sure, employ data scientists to ensure you’re getting the right cuts of data and analysis, but be sure that you’re also focused on insight. That means you’re identifying meaning in all those numbers you can pull. Just because you have access to mountains of data doesn’t mean you have to (or should) use it all!

Bill Clinton famously wrote that he got involved in some unsavory executive behaviors because he could. In other words, he engaged in unproductive activities because his great power enabled him to.

Many of today’s executives, analysts, and advisors participate in navel-gazing exercises that result in really cool charts but no action because they have access to never-ending data and capacities to manipulate it, without the will to stop and ask two key questions:

  1. What does the data we have mean? Interpret data for insight. Don’t just admire data for merely existing.
  2. What would more data really do to improve our understanding of that meaning? Analyze for decision-worthiness. Think of data availability as a question of “enough to make a decision” vs. “enough to make a comfortable decision.” By the time you make a comfortable decision, the competition is already there.

Our mission at WGP is “to improve our clients’ strategic positioning and enduring performance by providing practical strategic data, analysis, insight, and advice to top management.” It’s true. We wrote it down. We are focused on the fact base, but we fail if we deliver no insight from it. If we can present meaning and action, we are successful. If we merely deliver data, we aren’t doing our jobs.

Our clients appreciate us for this fact-based yet practical approach. In today’s data-rich and insight-poor environments, it’s important to have a partner to help sort through the morass.

Your bathroom scale may be able to send you data while you’re chowing down on fried chicken, but does that really matter if it doesn’t result in changed behavior? Knowing is only half the battle.

What do you think? 

United Airlines and Only Following Orders

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Only following policy only hurts your business.

By now, you’ve doubtless seen the sturm und drang surrounding United Airlines’s escalation of an unreasonable passenger’s behavior to forcible police action against the passenger.

If not, here’s one link to give you some background.

United’s CEO Oscar Munoz then, and now famously, backed his employees for following the rules and doing the right thing.   He called the passenger “disruptive” and “belligerent” and emphatically stood behind his employees.

Now, a lot has already been written about how United took the most painful route to resolution with this situation (not this passenger, more on that later).  The company could have simply continued to raise the offer of compensation to passengers who would leave the plane until “somebody” felt it was worth it to leave.  Investor’s Business Daily had a decent article on this.  It’s here.  

But, that article, while precisely right, probably ignores a reality of large company “policy and procedure.”  And, I’m just guessing here.  But, what we have likely seen is the result of a company policy that prevents gate agents from offering more than “X” dollars compensation for re-accommodation.  In other words, the gate agents, in escalating this circumstance to (1) random selection of passengers and (2) calling in the police were merely “following orders” or “complying with policy.”

Having a large number of people in a large organization adhere to policy is good for business as a rule.  But it’s awful for business during a true hard case.  And, it appears that this is a true hard case.

As many of you have probably experienced in sales and retail environments, someone sticking “policy” in your face as a means to resolving customer service rarely makes you a more loyal, understanding customer.

And this is where United’s CEO got this one wrong.  Munoz has been attacked from the perspective of his communications being awful for public relations; but I’ll go so far as to say his words are probably bad for business.

What he said to his employees in an internal email was “I emphatically stand behind all of you.”

That’s an admirable statement from a CEO, and not an easy one to make in a crisis like this. But it is a callous response to the brutality of events precipitated by United’s escalation to the police.

What he should have said was probably something like “I stand behind you, but in a truly hard circumstance like the one we just experienced, you have the discretion to choose a better way.” And, he ought to ensure policy allows for it.

Now, on the passenger:  It’s quite possible that this particular passenger would have stayed on the airplane no matter what.  He appears to be a truly unreasonable fellow. At the end of his ordeal, he wasn’t dealing with flight attendants, but with the police.  When you are non-compliant with a sworn law enforcement officer, you are making your own bed.

But this situation isn’t about that guy.  That guy exists on every flight in America. Forget him. He’s a screaming lunatic who put himself and his travel plans above dozens of other people’s (before he was forcibly removed, then walked back on the plane).  That’s true no matter whether he was “technically” right just as it’s true that Oscar Munoz’s comments were wrong even if “technically” right.

This is about the other dozens of passengers, at least one of whom might have left for a higher price. I’m always surprised when we fail to look at circumstances like this one and forget that there wasn’t just one option available to United…there were dozens of other options, many of whom were probably closer to leaving than the guy who ultimately was dragged off the flight.  People have already forgotten that the unruly passenger wasn’t the only one selected against his will.

There were three others.

The other three left peacfully, probably with some compensation and a hotel room for the night (and no doubt with a bad taste in their mouth about United).  Sure, that may make them “sheep” with no respect for their “rights,” but it left them with choices, too.

While responsibility for the escalation resides with United and “policy,” I think it’s fair to say to United employees that they will encounter another jerk in the future.  Their option is to blacklist that jerk from ever flying United again if he chooses to take this flight at this time against the company’s wishes and policy, and select another passenger.

It’s the jerk’s choice at that point.

So, bad things all around.  The CEO’s “right” but callous focus on company policy is a bad thing for business.  The passenger’s “right” but idiotic stand ultimately got him entangled with the police.

Sometimes, a little discretion is all it takes.  Only following policy only hurts business.

What do you think?

 

 

What If You Gig a Lemon?

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As the gig economy continues to evolve, how do we define value in it?

I had this link come across my newsfeed today.

It looks like seminal gig economy facilitator TaskRabbit is pursuing a strategic sale.

From the article:

One of the earliest and most prominent startups of the so-called “sharing economy” or “gig economy” is evaluating the possibility of selling itself. As reported by Recode, freelance work marketplace TaskRabbit acknowledged that it is contemplating a sale after receiving inbound interest from a possible strategic buyer.

Now, I won’t comment on the merits fo the report other than to say that “inbound interest” usually means “we put ourselves up for sale and somebody called.”

Usually.

But it raises the question in this whole gig economy concept.  How do we place value on freelance contractors?  This issue is one that certainly matters to anybody contemplating the valuation of TaskRabbit as a company (because, one would assume, the value of a broker is in its ability to consistently snag a vig out of a high-value transaction for both the buyer and seller of a service).

When it comes to well-defined services like Uber, one can establish real regulating metrics for the service and scare out poor quality relatively quickly (especially when it comes to competing against taxis in most cities, which are decidedly…crappy). And, as with the mountains of venture capital that have underwritten Uber’s below market prices show, you can incite trial use of almost any simple service.

But, when it comes to more trust-oriented services, like those TaskRabbit sells, the ability to assure value becomes a big issue.  If I’m going to invite someone into my house to assemble furniture (one of the tasks that TaskRabbit puts right on its front page as an example), I have to know what risk I’m actually taking for the price.

And, you know what?  That risk is highly variable.  The person might break the furniture, soil the carpet, and scratch the floor.  Sure, TaskRabbit can reimburse for that, but who takes the risk of time, disappointment, and re-work?

You do.

And that’s where the gig economy will face its biggest challenge:  quality assurance a priori.

The more complex and critical the task, the more difficult the quality assurance mountain to climb.  Move from a contractor who assembles your furniture to one who builds your financial plan, and you start to see how trust gets built into the equation.  You always seek references (or the backing of a big balance sheet) when looking for a new financial advisor.

The problem with mass-market matching services (in both the consumer market, like Task Rabbit, and in professional markets, like any number of talent agencies out there), is two-fold.

First, the discerning buyer who cares deeply about quality and who is likely far more loyal to high-quality experiences–we at WGP call these the “clients you want”–won’t take the risk on a mass-market service. They will either demand a barebones price, or just go on about their business.

Second–and this is the real challenge for gig-talent-markets–people with real high-quality and trustworthy talents are usually already busy.  There’s a reason the A/V contractor all your friends like is booked 4 months out.

He’s a good one.

The confluence of these two factors leads gig-market-makers like TaskRabbit to face a version of the classic “lemons problem” in used car markets:  Because sellers can hide the true quality of their services ex-ante, buyers demand pricing that assumes the service is already a lemon.

This is a problem for any broker, and acts as a weight on prices (to the benefit of the buyer, to be sure…but to the detriment of the seller and the broker). So, companies focused on brokering services that are increasingly ambiguous will face the biggest issues and talent validation costs.  Talent markets for high profile independent consultants are already seeing some of these cracks.  Those services place, on average, very strong consultants with their companies. But that’s on average, which means not systematically.  And, it only takes one “oh crap” to screw up a whole lot of “atta boys.”

The solution?  The more critical the task, the more intense the background check and validation of the service needed. In the home furniture assembly market, it probably only means a handful of 5 star ratings on an app.  In the independent consulting market, it probably means a handful of real, solid references not coming from the broker themselves.

It’s the same as it ever was.  The outer circles may (and should) get contracted out through efficient means (like Uber, Lyft, etc.), but for the inner circles?

Trust is king.

I suppose this spells danger for the “strategic buyer” evaluating TaskRabbit today. In-home services are a challenge, and risk sharing in that world is doubtless fraught with concerns.

What do you think?